Cancellation for Non-Enrollment by End of September
Recovery of Incentives Such as Floor Area Ratio Benefits
Priority Payment of Deposits to Senior Tenants
The Seoul Metropolitan Government has announced plans to cancel the registration of rental business operators for Cheongnyeon Ansim Jutaek (Youth Safe Housing) units that have not enrolled in guarantee insurance, and to prioritize the return of deposits to tenants with seniority who have suffered losses. In response to a series of recent incidents involving the non-return of deposits in privately leased types of Youth Safe Housing, the city has launched comprehensive countermeasures.
On August 20, the city stated that it has prepared and will implement measures to address the issue of deposit returns for Youth Safe Housing.
First, the city plans to prioritize the payment of deposits to senior tenants who have not received their deposits back and urgently wish to move out. After providing the deposit through financial institutions and law firms, the city intends to participate in auctions to recover the equivalent amount. To this end, the city has reportedly requested major commercial banks to acquire deposit return claims. By acquiring these claims, the right of priority repayment can be transferred, making recovery through auctions possible.
For junior tenants whose deposit recovery is uncertain, SH (Seoul Housing & Communities Corporation) and LH (Korea Land & Housing Corporation) will step in to support victims by acquiring the properties at auction. This will be done by obtaining the right of first refusal from victims of rental fraud, acquiring the property at auction, and using the auction profit to support the victims.
An emergency support system will also be activated for affected youth. This month, the Seoul Jeonse Damage Support Team will be dispatched to two sites where deposit return problems have recently emerged, to hold counseling sessions on the process of filing claims and preparing necessary documents. For young people facing difficulties moving due to delayed deposit returns, the city will also provide information on loan connections and legal measures.
The city will also implement strong measures to prevent rental fraud in advance. For projects recruiting tenants, if guarantee insurance is not obtained by September, the city will cancel the registration of the rental business operator. In addition to imposing fines, the city plans to reclaim benefits such as floor area ratio incentives and loan support that were granted during housing construction for businesses that have not enrolled in guarantee insurance. The aim is to block the entry of unreliable operators and strengthen accountability to tenants.
Furthermore, the city will verify the financial soundness and ability to obtain guarantee insurance of business operators from the selection stage, to prevent unreliable operators from entering the Youth Safe Housing program. The city will also monitor whether obligations are fulfilled even after tenants move in.
Recently, some Youth Safe Housing units supplied by the city and SH Corporation have been subject to compulsory auction and provisional seizure. In the case of the Jamsil Central Park Youth Safe Housing, the project operator failed to pay the construction company, resulting in the property going to auction. Since the building was not covered by guarantee insurance, 134 tenant households are now at risk of losing deposits totaling 23.8 billion KRW. In Sadang-dong, Dongjak-gu, the 'Cove' Youth Safe Jeonse Housing has also seen its guarantee insurance delayed for nearly a year, and more than 50 households have faced provisional seizure due to the private operator's debt issues, heightening tenant concerns.
Choi Jinseok, Director of Housing at the Seoul Metropolitan Government, stated, "For young people, the housing deposit is often their only large sum of money and represents their entire wealth, so we will do our utmost to minimize damage and provide swift support for the return of Youth Safe Housing deposits. We will continue to listen closely to voices on the ground and develop new policies so that young people can pursue their dreams and future without worrying about housing."
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